Trump's steel tariffs are nothing compared to the looming war over intellectual property theft with China

US President Donald Trump's steel tariffs have caused
China to warn of trade wars and potential damage to the US
economy, but steel tariffs are nothing compared to the coming
fight over intellectual property theft.

Experts estimate that Chinese intellectual property
theft costs the US $600 billion a year, possibly the "greatest
transfer of wealth in history."

But by angering the international community with
protectionist practices like tariffs, experts question how
Trump will rally sufficient support against China's
intellectual property theft.

President Donald Trump hinted on Wednesday at what experts
predict will become the major economic and diplomatic clash
between US and China - and it will make steel and aluminum
tariffs look like small potatoes.

Steel is small potatoes

caption

A worker operates a furnace at a steel plant in Hefei

source

Thomson Reuters

While China has cautioned against Trump's announced aluminum and
steel tariffs, and warned that it could result in a trade war
which would harm the US above all,
the tariffs on metals won't really hurt Chinese businesses as
China exports just 1.1%
of its steel to the US.

Former Ambassador Jeffrey Bader, a former State Department expert
on China with 40 years experience on the subject, said that
"China's already under something like 150 anti-dumping and
countervailing duty rulings affecting much of the steel
industry," on a National Committee on US-China Relations
call.

And while the US does make steel, in recent decades the US has
created immeasurably more wealth from innovations that hinge on
intellectual property being respected.

"This is the PSATs compared to the SATs coming up," Bader said of
the tariffs, adding that confronting Chinese intellectual
property theft was "the big game."

But according to Bader, the US may have already squandered its
shot at the "big game."

The "big game" is coming, but Trump may have already blown it

source

Carlos Barria/Reuters

"It would be better to try to maintain some semblance of
international solidarity with the Japanese and the EU and
others," said Bader. Instead, the US appears ready to go ahead
with tariffs and protectionist practices that already have key US
allies and partners going to the WTO and
threatening trade wars.

Meanwhile, most countries would benefit from stronger protections
against Chinese intellectual property theft. But instead of
galvanizing global support for a crackdown on this costly sort of
theft, Trump appears to have divided the world by rolling out the
tariffs first.

Privately, US industry figures have long reported Chinese
nationals photographing competitive technology. US businessmen in
operating in China have been known to abandon their phones and
electronic devices and take a walk while discussing important
business decisions.

"Having reversed the sequence," by imposing tariffs first, "it's
hard to see how there will be much international support," for
the US's coming campaign against Chinese intellectual property
theft, said Bader.